Employer Practices in Florida: The Pros and Cons for Offering Employees Unlimited Vacation Leave
According to a recent survey by the Society for Human Resource Management (SHRM), 92 percent (92%) of employees said paid leave was the single most important factor in determining their “overall job satisfaction.” Yet only 73 percent (73%) of these same employees said they were satisfied with the amount of paid leave offered by their own employer.
From a legal standpoint, neither the federal or Florida state law require employers to offer any paid leave or vacation time to employees (except for special circumstances, like medical leave, domestic violence leave, etc.).
So, for employers making decisions about vacation time for employees, the choice is typically an organizational decision. But as the SHRM poll noted, most businesses (about 95 percent (95%) in its survey) offer some type of vacation time to their full-time employees. So if you’re going to offer vacation, what is the best policy?
Won’t Employees Just Abuse Unlimited Leave?
One trend in vacation leave is to offer unlimited paid time off (PTO) or vacation time. Generally speaking, unlimited PTO means employers do not actually offer a predetermined amount of vacation or leave days. The employee can simply take leave as necessary, but usually with certain parameters like provided they are meeting their performance goals.
Most employers that offer any type of PTO have policies which still require managerial approval for vacation time. That is to say, an employee cannot simply stop showing up for two weeks without giving advanced notice of intentions to be off during that time. And employers with unlimited vacation policies typically still track the number of days an employee takes off, even sometimes just to know whether employees are using the policy.
This is important because one potential drawback to unlimited PTO is that some employees may feel they cannot take time off, lest they appear to be “abusing” the system. So, in many circumstances, unlimited paid time off may result in employees using less time off – rather than having the end-of-the-year rush for employees to utilize their annual vacation time before the end of the year (if the employer adopts a use-it-or-lose-it-policy).
This leads to another consideration, which is that with a traditional leave policy, such as offering employees three weeks vacation each year, the employee can “accrue” any unused time as a benefit that may be cashed out when they leave under certain circumstances (they can be treated as wages absent a policy otherwise. Under unlimited PTO, that does not happen, as there are no pre-allotted vacation days.
But, unlimited vacation policies should be carefully thought out as they can implicate other, unintended laws. To that end, it is important to tread carefully when transitioning your business to an unlimited PTO policy, especially if you do not have prior experience with such systems. There are a number of potential legal and financial pitfalls you need to consider first. For example, how do unlimited vacation days work in conjunction with an employee’s need for medical leave, like under the Family and Medical Leave Act? The policies need to be carefully crafted.
Which Employees Benefit the Most from Unlimited PTO?
While it might first seem counterproductive for an employer to offer unlimited vacation time, those businesses that have successfully implemented such policies often cite increased employee happiness and retention as positive outcomes. After all, when employees are not strictly held to a certain number of leave days, that can signal management’s trust in the employees, as well as a recognition of the importance of work-life balance.
And while you might associate unlimited vacation policies as a practice for attracting “millennial” workers, in practice many businesses find it is more experienced employees, those in their 30s and 40s with families, who often benefit the most from the flexible policies.
If you need advice or assistance in drafting or updating your leave policies, or believe you have been treated illegally by your employer due to your vacation policy, contact a qualified Florida employment law attorney on your questions of vacation policy law today.